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BBVA on BCRP: 5.00% Rate Before End Of H2 2022

PERU
  • BBVA Research estimate that the additional inflationary impact of a scenario in which the conflict in Ukraine lasts for several months (with significant impacts on oil and grain prices) would be 1.5 percentage points.
  • They also believe that inflation that remains higher for longer could further exacerbate expectations of price increases.
  • The context for monetary policy has been complicated because, on the one hand, there are persistent inflationary pressures, and, on the other hand, economic activity has been showing signs of slowing down in an environment global high uncertainty.
  • Faced with this dilemma, BBVA believe that the BCRP will choose to continue adjusting its monetary policy rate to contain a greater de-anchoring of inflationary expectations, and will raise it to 5.00% before the end of the first half of the year.

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